SUBJECTS: The Budget, car manufacturing, emissions trading scheme, asylum seekers, Fringe Benefits Tax, the global economy, free trade talks with China.
JOURNALIST:
Thanks Laurie. G'day, Treasurer, David Crowe from The Australian. In your speech you outlined the negative impact on growth as the resources boom changes beyond the next year. That's at around the time when the current Budget has a fiscal consolidation happening, quite a significant one, that also has a negative impact on growth as that fiscal consolidation occurs. Given your speech today, do you need to rethink the timing or the scale of that fiscal consolidation and I guess the bottom line there is what takes priority, the jobs or the surplus?
CHRIS BOWEN:
Well. I don't think it's a choice necessarily between the two, David. I think our fiscal settings are broadly right. I've said that consistently since I became Treasurer. I think the strategy of returning the Budget to surplus over time is the right one. I think the timetable outlined is the right one over time. I think that if we were to rush to surplus now, it would be a hammer blow to growth. There's no question about that. It would be a terrible strike to the Australian economy, but if you do so in a managed and transitioned way over the economic cycle I think it is the right strategy. I think it is justified in economic terms to stick to the plan of returning to balance and then surplus.
JOURNALIST:
Mark Kenny, Mr Bowen, from The Age and Sydney Morning Herald. Can I just on behalf of the board of Press Club say that we certainly endorse that offer of an economic debate and hope that gets taken up. Can I just go to your claim earlier on in your speech about Labor being the party of the individual, and you cited in the paragraph where you made that claim the examples of an Indigenous Australian and a single mother working or living in the Western Suburbs of Melbourne. Can I put it to you that Tony Abbott's commitment to Indigenous Australia is pretty well accepted and demonstrated and no-one really questions that and that Labor is the party that forced many single mothers off of the parenting payment on to the lower Newstart payment with tougher work rules and so forth to the great economic disadvantage of those people. So I'm wondering is this just a claim that's really just crass marketing or are you just trying to make a strength out of a weakness?
BOWEN:
I'm not sure if you've read the book yet, Mark, because the book goes into that in quite a bit of detail. Because I make the point that to care about an individual is to care about government intervention to assist individuals who are from the wrong side of the tracks as well. It's not enough to have the rhetoric about individual rights and the ability of individuals to grow into everything they have the potential to be. You've got to believe in government intervention to ensure that individuals have that capacity.
Now, I'll give you one other example; schools funding. Mr Abbott says schools funding isn't broken. Now, there can be legitimate discussions about how you fund it, the time frame over which it should be funded and how it can be delivered and how you work with states to do so. But to pretend or to claim that school funding in Australia isn't broken when you have disadvantaged schools massively underfunded, I think that belies a lack of belief in the individual and the opportunity for every individual, if they went to - if they go to an underfunded school, to grow into everything they have the potential to be.
JOURNALIST:
Good afternoon, Treasurer. John O'Doherty from the Nine Network. Labor's been highly critical of Campbell Newman for some of the drastic spending cuts that he made after he was elected. Given that you are now Treasurer, know the state of the books and declining revenues, will you will be upfront about what spending cuts may be on the cards beyond the election?
BOWEN:
We already have been upfront about spending decisions, tough ones. I announced a series earlier this week because that's the responsible thing to do and I put the spending decisions out there and outlined the consequence of those. They weren't easy, but they're necessary and it will be necessary from time to time. But that's what you do, and there are tough decisions required and tough decisions will continue to be required. But I tell you what we won't do - we won't appoint a secret audit commission and say look, we're going to appoint this commission and then they're going to come back to us after the election and tell us where we should cut.
That is not being upfront with the Australian people. That is not being honest with the Australian people. That is Mr Abbott's plan. That was the Newman plan. It's a dishonest way of doing it and we will continue to condemn it and point out the downsides of that approach.
JOURNALIST:
Laura Tingle from the Financial Review, Treasurer. I just wonder - what you've done with the carbon package is you've kept the assistance package in place but you're proposing to drop the price. Do you see that as a measure that will actually stimulate the economy, if you like, or support consumer spending while we're going through this transition? And also there's been some discussion about whether the carbon package will actually ever go through the Parliament. Can you envisage a scenario where, like the Coalition, Labor may have to take this measure to a double dissolution election to get it passed?
BOWEN:
Let me deal with those two issues sequentially. Firstly do I see it as a stimulus? I do see it as an encouragement to investment, both from an industry point of view and from the household assistance point of view. We made a commitment to the Household Assistance Package which was permanent. We felt it was important that we honour that commitment, even going to a floating price one year early. We were always going to go to a floating price, bringing the price forward. We thought it was still important to meet that commitment.
In terms of your question about that issue, well, obviously it needs to be legislated, the change needs to be legislated. We think that's the appropriate thing to do. Regardless of whether it goes to the Parliament before or after the election we are seeking a mandate. We are seeking a mandate. We are seeking a mandate to do it. Now, it's the position of the Liberal Party really, after having campaigned against a fixed carbon price for three years, that they will oppose a re-elected government with a mandate to change that policy, they will oppose it in the Senate? Well, if that's their position I think they will be held to account for it. So I'm not going to go into post-election hypotheticals. I'll simply make that point that whether it goes to the Parliament or not will depend on the entire Parliament, both houses. It's unusual for a government to have majority support in the Senate. Of course we'll be campaigning for it, we'll be out there trying to earn it, but it would be an unusual historical event and that will come down to the crossbench and Opposition views on the mandate that the Government will have sought and, if we win, received.
JOURNALIST:
Treasurer, good afternoon. Kieran Gilbert from Sky News. Regarding the fringe benefits tax concessions on salary sacrifice vehicles and the timing of them, do you have any proof that they were being rorted? If so what's the proof? And if you've got it, why didn't you tell the industry first before announcing the changes?
BOWEN:
I've tried to answer these questions quickly to get everybody a chance but I'm going to spend a few minutes on this one because it is an important question. Now let's be very clear here. Now, this went through the normal Cabinet processes and the Expenditure Review Committee consideration over the last period, of course, with advice from all the relevant central agencies. Now, what we have not done is abolish the fringe benefits tax concession for business use of cars. I've seen some media releases suggesting that we've done that. I've seen speculation that we've done that. It's just not right. We haven't done that.
What we have done is said that if you're going to claim a concession for business use, we would just like some evidence that the car is being used for business purposes, a little bit of evidence, not an onerous requirement. We want some evidence and so we're asking for three months of records, three months of records over five years. Not a log book being kept every day for five years, we're asking people to keep records for three months and that will last for five years, and within that first 12-month period the individual concerned can pick the three months they want to, to maximise their chances of getting the maximum tax concession. So the idea that this is some sort of red tape nightmare is one that I reject. Lots of tradies, lots of people are out there keeping log books right now.
Now, this is also a matter of fairness. If you're getting a car for 100 per cent or almost exclusively personal use, you should be treated the same if you were a battler who goes down to buy a second hand car in Parramatta as if you buy it through a novated lease, and that means you don't get the sort of tax break that you might otherwise like. Now, I know this is controversial. Reforming the fringe benefits tax never is uncontroversial, but it's the right thing to do for fairness and regarding our fiscal circumstances. It's the right thing to do to recognise that times have moved on. In 1986 when this method was introduced, a log book was difficult to keep. Now you can download an app in seconds and it will keep the records for you. You download your registration number and it assists you greatly and sends the messages direct to the people who need to get the messages about the business use.
And this is the final point I'm going to make. Actually, two final points. Firstly, when the Opposition crying crocodile tears about concerns for the car industry, these guys who would - who are promising to take away half a billion dollars' worth of support from the car industry. I mean, I'm a - you know, I always come at these things from a less government intervention point of view, but support for the car industry is pretty important, and when you've got the Opposition promising to take it away, that is a big problem.
And here's my final point. You hear a lot from the Opposition about the need for surplus, the need for tough spending decisions, the need for tough fiscal approaches. You see chest beating, you see huff and puff, you see Mr Hockey going off to London to give really important and big and tough speeches about the age of entitlement. When they have the chance to actually back a reform which says well if you're claiming business use of a car we'd just like to see a little bit of evidence of that, we see huff and puff in the other direction.
So if the Opposition doesn't accept this claim, doesn't support this step, next time Mr Hockey is here talking to you about the need for tough decisions and fiscal austerity and return to surplus, I'd invite you to laugh him out of the room.
JOURNALIST:
Stephen Scott from the Courier Mail, Treasurer. I was interested in your ideas on how to reform the Labor Party and in particular how to change the links between the union movements and the Labor Party. I'm wondering what level of support is there in the Caucus for your idea that MPs may not need to be members of trade unions? Have you formally discussed this with anyone? And secondly, on the reforms that the Prime Minister has announced on throwing open the doors of the party, giving the rank and file more of a say, what level of support is there for those changes and why should people be - have any confidence that whatever is endorsed by the caucus next week may not simply be overturned by the next national conference?
BOWEN:
Well, I do think the Caucus will expect, I expect, support the motion by the Prime Minister to change the party rules. I think it's a good reform. Obviously I do because I'm on the record in my book in supporting almost exactly the same reform. I think it's important on a number of levels. I think it's important in terms of certainty that a person who is elected Prime Minister sees out that term. I think that's a good reform. But also, I think it's very important in terms of inclusiveness and inviting the Australian people into the Labor Party and giving them a say in our most important decision. It's a reform that would not have gotten anywhere just a few years ago but I think the debate has moved on and I do expect it to be endorsed.
In relation to your question about other reforms, I think I suggest seven in the book, they're my ideas, they're my contribution to a debate which I think is important. I make the point in the book it's important whether we win the election or lose the election because I think we're seeing some structural changes in the Australian body politic and we have to modernise and respond. We have to adjust and I think if we do that then gives us a big opportunity, a big advantage over our opponents who don't seem to feel that they have the need to modernise and respond to changes in society.
So look, these are my contributions. I've not discussed them in great detail with a lot of caucus colleagues. People have different perspectives and different views about some of them but I do think there's a growing attitude for reform within the caucus. I think that's a good thing and growing attitude for reform, an appetite for reform, across the party. I've been very heartened by the rank and file response to the Prime Minister's proposed suggestion. Branch members saying yes, wonderful, we want to have a say with you, we want to share that choice about who should lead our party and I think it can reinvigorate the party.
I made the point after 2010 when Gordon Brown vacated the field in the United Kingdom after a pretty devastating election loss. There was a party - an election for leader and the Miliband brothers and Ed Balls and others traipsing around the country campaigning for the leadership, engaging in debates and the Labour Party membership in the UK was reinvigorated by that just weeks after a big devastating election defeat. Reinvigorated by that process and I think it can be a good process in Australia as well. At least we'd see candidates for the leadership of the Labor Party debating each other even if the leader of the Opposition won't turn up to a debate.
JOURNALIST:
Good afternoon. Shalailah Medhora from SBS TV News. Treasurer, you would know from your time as Immigration Minister that Australia takes relatively few refugees every year, globally speaking. Yesterday your colleague Jason Clare said that the issue of asylum seekers has been poisoned by politics and today we've heard that the Government is seeking to review Australia's obligations under the UN Refugee Convention. Does Australia risk being seen as a whinger internationally over this issue and how would we pay for any potential toughening up of the policy?
BOWEN:
Let me deal with the supposition to the question because I don't quite agree with the premise that Australia takes relatively few refugees on global terms. I understand where you're coming from in terms of the 43 million displaced people in the world, either refugees or in refugee-like situations. Yes, the 20,000 people that we take is a small proportion of that and always will be. But we do take more refugees per head of Australian population than any other nation in the world. We take either the second or third most in absolute terms, depending on how you calibrate your calculation.
We're very close to Canada and in terms of resettlement it goes United States, Canada, Australia and then there's daylight. And certainly in my time as immigration minister that was very well recognised and respected on the international stage. If you talked to the UNHCR they are very mindful of Australia's role in international resettlement. Going into camps, getting people out of desperate, horrible situations, and giving them a chance of a life in Australia.
But that doesn't mean that we can let that program be dominated by people arriving in Australia by boat for two reasons. One, it's very unsafe and we've seen far too many, far too many drownings at sea. We've seen more just in recent days and there is nothing compassionate about that, nothing humanitarian about that and you do need to make, again, tough decisions about how to deal with that and you also need a fair system, an orderly system.
I've been to refugee camps around the world with conditions that I find difficult to describe and there's people in those camps who stand no chance of getting the money to come to Australia by boat and I don't want them forgotten in the debate either.
JOURNALIST:
Michelle Grattan from The Conversation. Mr Bowen, if I could take you back to the rule change issue and the point you were making about certainty, you were one of the people to the forefront in removing Julia Gillard and installing Kevin Rudd and the polls have indicated that that was a sensible course to take. So I wonder why you want to deny to a future caucus the opportunity, in effect, to avert electoral disaster and secondly, how do you square your own actions with what you're now saying needs to be done in terms of the rule change?
BOWEN:
It's a fair question, Michelle. I have been strong and vocal and clear in my support for Kevin Rudd for some time when it wasn't a particularly fashionable thing to do. And that's for a number of reasons. But I think the circumstances which led to the successful return to Kevin were frankly pretty unique. They are circumstances which go to his departure from the prime ministership in 2010 and the pretty strong view expressed by the Australian people that there was a case for his return.
Now, I do recognise that this is a challenge for the caucus in terms of ensuring that a leader is more difficult to remove, that's a legitimate point to make, but I also think that the circumstances in which a leader should be removed are pretty rare and unusual and that the rule changes that are proposed are a pretty sensible adaption to modern events. And, as I said before, the changing role of society, the wish for party members to be more involved and included in key decisions.
JOURNALIST:
Malcolm Farr from News.com.au. Again to the car industry. The Indian vehicle industry has a work force of 17 million. Now that's 75 per cent of our entire population, something like 140 per cent of our entire work force. How could an Australian - and that's just one competitor in this area within our region. How could an Australian industry compete with an industry of that size with a domestic market the size of India's?
BOWEN:
Exports. I think that you're right, Australia has a relatively small domestic market and that's been a challenge for the Australian car industry for as long as you'd care to remember. But the key to, I think, the success, the future success of the Australian car industry is inserting itself in the global supply chain, exporting from Australia. I think the firms that have done that have a brighter future because the Australian market is small and is difficult to sustain. I think that that's the very focus of Kim Carr's work with the manufacturers.
I do think car manufacturing is important for all sorts of reasons. Flow on effects in the Australian economy, impact on R & D, et cetera, but we do need to insert ourselves in the global supply chain to be sustainable and to be successful going forward.
JOURNALIST:
Colin Brinsden, AAP. While obviously the focus has been on the carbon tax in recent weeks, have you made any consideration to make changes to the mining tax? I mean it raises so little revenue and yet it costs millions of dollars to comply with according to the industry, or have you just thought about dumping it completely and just put it down to a bad timing experience?
BOWEN:
The answer to your question is no, we are not contemplating any changes to that tax. It was quite a process for it to be introduced and I think that process, having been completed, it should be allowed to operate how it will over the cycle. We'll see what sorts of revenues it raises into the future but now is not the time to be reviewing it.
JOURNALIST:
Treasurer, good afternoon, Mia Greves from the Seven Network. Treasurer, I'd like to ask you another question about fringe benefits tax on the salary sacrificed car packages, if I can. The Opposition say this will not impact high income earners but those on average incomes such as teachers driving Commodores, or public servants in Camrys. So who is impacted? Is it the aspirational class, and what do you say to those who claim it's just another example of Labor's class warfare?
BOWEN:
Well that's - well you can't, with respect Mia, you can't have it both ways. Now let's just engage in the facts here. I mean I saw Mr Hockey yesterday say that most people affected earn less than $100,000. It's just not right. He's just wrong. It's not me saying it. I mean it's based on the advice of the experts, the independent agencies, the Australian Bureau of Statistics, the Australian Tax Office, the Treasury, all working together to bring the facts and figures together.
Now, I'm not sure what Mr Hockey's basing his assertions on. I'm telling you what I'm basing mine on. He's entitled to his own opinion, he's not entitled to his own facts. And to point out that that is incorrect, to point out that he is incorrect about the types of people impacted is not to engage in class warfare, it's to point out the facts. I'm not saying that people earning $100,000 are wealthy or high income earners, I'm just saying that's the cut off that he nominated and not like on many other issues, frankly, he's got his facts wrong.
JOURNALIST:
Good afternoon Treasurer, Lanai Scarr from News Corporation. You mentioned in your speech that emissions trading was the right policy response to climate change. Why then did you not speak out more against Julia Gillard legislating for a carbon tax? And also can you guarantee that an earlier move to an emissions trading scheme won't cause bill paying for every day Australians?
BOWEN:
Well, it's the right response for the times. Now to say that in light of the economic circumstances, the headwinds in the economy, the transition that's going ahead that I talked about in my remarks, to weigh all that up for a new Prime Minister, a new Treasurer, a new Climate Change Minister, a new cabinet, in effect, to look at these issues with a fresh set of eyes, is not to criticise past decisions. We were always going to go to an emissions trading scheme. We've taken the view the right thing to do is to go to it earlier. That's a reflection of our view, our assessment based at the time.
So you can - it's not a backward looking process, it's a forward-looking process to say with all the evidence available it's the better policy outcome for these times. I think all the Treasury modelling, which has been pretty spot on, I mean you can criticise Treasury forecasts and I know many people do, but when it comes to carbon pricing and its impacts on the economy it's been right.
People are quick to point out mistakes. Let's point out where they've got it 100 per cent right. The impact of carbon pricing on the economy, all the things they have predicted, have happened and so I see no evidence that their prediction or their forecasts that going to a floating price earlier will provide cost of living relief to families should be wrong.
JOURNALIST:
Treasurer, Shane Wright from the West Australian. I just want to touch on the budgetary ramifications of asylum seeker arrivals by boat. For this year it was forecast that it would cost the Budget about 3 billion from 13,200 arrivals. So far this month there's been almost 2,200. So you're on track for about - well over 48,000. Now, that's supposed to cost 3 billion. Has the Budget already been broken in regards to boat arrivals? How important is it for the Government to get this element of the Budget under control, or will it force you to make other cuts in other areas because of the inability to control the nation's borders in terms of cost?
BOWEN:
Is it expensive? Yes, it is, boat arrivals are expensive and in my experience in almost three years as Immigration Minister working on these issues it doesn't matter how you do it, it's expensive. People say you should abolish detention centres because they're expensive, well the alternative is expensive as well. You can't let that be forgotten. Yes, it's expensive and yes, it has an impact on the Budget.
The main reason for keeping your policy under adjustment is to save lives. Then it's also important we have a fair and orderly process and yes, if you have a safer and more fair and orderly process you can use those resources to bring even more people out of refugee camps as we've done by increasing the refugee quota to 20,000 places. Now, these figures get updated, Shane, as you know, in all the relevant updates, that's where the figures are updated and the adjustments made, not by me on a daily basis but on advice by agencies using the normal Budget update processes.
JOURNALIST:
Treasurer, Philip Hudson from the Herald Sun. You talked in your speech about wanting to make sure that changes were as smooth as possible and the bumps were minimal with no jagged edges. Can I suggest to you that whatever the policy merits of the fringe benefits tax changes, the way it's been implemented does have a lot of jagged edges. We're hearing from companies in Melbourne and around the country that say they're going to sack workers tomorrow because of the changes, because an industry's been allowed to grow over 20 years where jobs, economic activity and livelihoods have been built around this tax advantage, whether it's a loophole or a rort or whatever it is, so their problem is with the implementation.
I've also been contacted by a reader of The Herald Sun who says that he earns $68,000, he has a car package and he's advised by his employer - and he says he just drives a normal Ford sedan, he's been contacted by his employer and says that his fringe benefits tax liability that will appear on his group certificate is going to go from $4,600 to $15,000, which for him means his family tax benefit is going to be cut by $850 a year. Is that an unintended consequence that people's welfare is going to be hit?
And if I may, you've talked about Paul Keating, what advice did he give you about being Treasurer?
BOWEN:
Paul Keating's advice is that sometimes hard decisions might need to be made, and I recall him reforming fringe benefits tax on meals in, I think it was the 1980s. It wasn't popular, it was controversial. I don't hear people today clamouring for a policy change back because it was the right thing to do to put the Budget on a sustainable footing. Sometimes those decisions are necessary.
In this case this went through, of course, guided by me as Treasurer, the Expenditure Review Committee process. We decided that it was appropriate that there be some transition period to April. So there's a time for people to adjust. That is in the package and was announced by me on Tuesday as part of the package that there be a transition period to April. And it only applies to new contracts, even if a car has not been yet delivered, it's been ordered, it's not yet been delivered, that can be done under the old rules.
So it is controversial, of course it is. And of course, you know, business models that are built up around a particular method of tax concession, when you change that you're going to annoy some people but you're not going to return to surplus, you're not going to make the changes like the one we did to carbon pricing without controversial decisions. And I'm up for that task as Treasurer. If it's too controversial for Mr Hockey that's a matter for him to explain how he's going to reform the Australian economy. If a change like this, which requires a little bit more evidence of business use, is too controversial for him, let him explain his reform credentials maybe in that debate that we have whenever he chooses to turn up for it.
JOURNALIST:
What about on the family benefit?
BOWEN:
On the family benefits, I'll - obviously there's individual examples. I'm happy to look at that example and see if it's correct or not.
JOURNALIST:
Phil Coorey from the Fin Review. On Budget and spending and cuts and surpluses and so forth, in the immediate days after the leadership change Kevin Rudd and Kim Carr amongst them flagged they were looking at reversing several policy areas or changing. One was the ETS which has been delivered. Two others which were publicly flagged was the university - the higher education cuts that were made by Julia Gillard to fund Gonski, and the other one was the welfare cuts, pushing the single parents on to the dole which, as you would know firsthand caused a bit of trouble in Western Sydney. I wonder, are those latter two still under consideration, have they hit the fence or will they be looked at after the election?
BOWEN:
Oh look Phil, there's a lot of speculation about different things that the Government may or may not be considering. You know, inevitably, with that speculation, some of that speculation will be right, some of that speculation will be wrong. Treasurers and ministers find it difficult to play the rule in, rule out game because once you rule one out then you're asked to rule everything else out. There's a good cabinet process which has been under way with the emissions trading scheme decision, cabinet members working collegiately and collaboratively together on that change, and of course across the board, we look at our different options both in a normal government policy context and in an election context.
So, that work you would expect to be going on across the board. Any decisions we make will be done in a fiscally neutral way, responsible way with appropriately difficult spending decisions made at the same time.
JOURNALIST:
Good afternoon, Treasurer. [Indistinct] Xinhua News Agency of China. There is a report today's The Australian about Trade Minister Marles planning to go to China for the free trade agreement talks, and the report said Australia is changing its stance in the talks and making concessions on the threshold of Chinese investment in Australia. Can you confirm that and can you clarify Australia's stance in this issue?
BOWEN:
I'm afraid I can't confirm that because negotiations obviously between Australia and China occur through that process, and I'm not going to blunder in and start commenting on how those negotiations are going and what's being discussed by Minister Marles. We do have a commitment to trying to finalise what we see as a very important free trade agreement. And I know Minister Marles at the Prime Minister's request has been prioritising those discussions with his Chinese counterpart and I'm looking forward to meeting my Chinese counterpart in the next day or so.
No doubt we may well touch on those issues as well, but in terms of the detailed status update for those negotiations I'm not in a position to publicly confirm any details but I know Minister Marles is appropriately focussing on it.